Imposter scams bilking consumers of millions

Updated
2:07 am CDT, Saturday, March 16, 2019

WILLOW GROVE, Pa. (AP) — The distraught voice on the phone didn't sound like her grandson.

But the man who called 80-year-old Elfriede Flavin claiming to be her grandson's attorney explained why: Her grandson had broken his nose in a car accident that also landed him in a Tennessee jail. He needed $10,000 for bail, but the exchange had to be secret because of a "court-ordered gag order."

The money would be returned once the case was settled, Flavin and her husband were assured. They wired the money, but then another complication surfaced: The person injured in the crash was a pregnant woman who lost her baby as a result, they were told. Bail was upped to $50,000.

"At this point, we were essentially horrified, both for my grandson, who was looking for a career as a lawyer, and for the mother with the lost child," said Thomas Flavin, 77, in testimony he provided to Congress, adding that the "gag order" stopped them from notifying authorities.

After sending $80,544 to different addresses to free their grandson, the Flavins finally called family.

"Their grandson was exactly where he was supposed to be ... studying at his college in Buffalo," said Erika Flavin, who testified in January before the U.S. Senate Special Committee on Aging on behalf of her parents, who lost their savings in the scam.

The grandparents scam is not new. Yet scams of all kinds continue to grow, fueled by technological advances in the wrong hands, consumer advocates say. Today's scammers use computerized systems to deliver thousands of recorded messages in minutes to cellphones and landlines. Many fraudsters can pump out untraceable calls by the thousands, paying less than a penny for each one. Some pull personal data from the "dark web," an area of the internet once reserved for high-level law enforcement, police said.

The Federal Trade Commission said consumers reported losing more than $1.4 billion to fraud in 2018, with $488 million taken in imposter scams like the one that befell the Flavins.

While seniors often are identified as the most vulnerable population, people in their 20s last year reported being scammed more often than those in their 70s, according to the FTC. However, those in their 70s ended up losing more money: an average of $750, compared with an average of $400 lost by younger victims.

Legislators are taking note. The recently reintroduced and bipartisan TRACED Act, sponsored by Sens. John Thune, R-South Dakota, and Ed Markey, D-Massachusetts, would increase the Federal Communications Commission's enforcement authority against illegal robocallers and mandate the adoption of systems to authenticate callers, identify illegally spoofed calls and block them. Phone carriers have the technology to use caller authentication services, but so far no law requires them to use it.

In a statement supporting the TRACED Act, FTC Commissioner Rebecca Kelly Slaughter said the legislation "would deliver on the promise carriers have made for years of meaningful call authentication to help weed out illegal and unwanted calls. The carriers have the technology to do it and this bill helps make sure they use it."

"Last year, the Federal Trade Commission logged an incredible 3.8 billion complaints about robocalls, and some experts estimate that nearly half of all mobile phone calls will be fraudulent by the end of this year, unless technology is deployed to identify and block those calls," U.S. Sen. Susan Collins, R-Maine, a member of the Senate Aging Committee, said during the January hearing at which Erika Flavin testified.

"This committee has repeatedly stressed the need for regulators and the business community to work more aggressively to stop scammers from using inexpensive technology to facilitate their fraudulent schemes. There is counter-technology, and I find the lack of progress in deploying this protective technology to be very troubling," Collins said.

Sen. Bob Casey, D-Scranton, said the explosion in the volume of phone scams stems from "crooks offshore" often beyond the reach of most police organizations. Casey, a ranking member of the Senate Aging Committee, supports the TRACED Act, and hopes that "the U.S. Senate will pass comprehensive legislation this Congress."

Casey and Sen. Jerry Moran, R-Kansas, also recently introduced the Stop Senior Scams Act, which would ensure that employees of retailers, wire transfer companies, and banks are able to spot a scam and stop it before money changes hands.

"We must rely on federal partners in any enforcement action," said Casey, adding that serious conversations need to happen with telecommunications providers. "But we'll never solve it on the enforcement end. It has to be prevention."

"We cannot let business interests get in the way of ensuring that not one more penny is lost to a scammer," he said.

'Just hang up'

The majority of scams come via phone, said Michael Bannon, director of Bucks County Consumer Protection. Common red flags of any scam include "a sense of urgency," a request to pay by gift cards or wire transfer and unknown links in emails, he said.

Bannon's advice is simple: Hang up. Do not engage in a conversation or toy with the caller. Do not respond.

The risk of being scammed goes up when you answer some of these calls, Bannon said, adding that lists of names and numbers are compiled and sold by scammers. The value of the list is tied to a caller's responses.

"When someone has been victimized, their name and personal information is sold on the underground web as someone likely to be scammed again," he said.

Some callers even will claim they are attorneys and can retrieve stolen funds, Bannon said.

"They say, 'I can get your money back if you pay me money in advance,' " he said. "It's a devious way to get money."

A trick that is trapping some people into answering calls is a method called "neighbor spoofing." A neighbor-spoofed call commonly will appear on a consumer's caller ID with the same area code and local exchange so it increases the likelihood someone will pick up, Bannon said.

Angelo Andreacola, 89, of Medford, New Jersey, said he is onto many of the tricks. At first, he would pick up the calls, which started with the same six digits of his daughter's number.

"I started remembering the last four numbers of the people I wanted to talk to," Andreacola said while sipping coffee one morning and discussing scam trends.

The closest he got to being scammed was in 2009, when he was selling a boat on Craigslist and a buyer called requesting financial information from his bank.

"I went to the bank, and the bank warned me not to do it," said Andreacola, who was grateful the bank stopped him. "I almost fell for that."

He and his wife now are careful about opening emails from unknown senders and refuse to give away personal information online and over the phone.

"I just hang up," said Dolores Andreacola, 88, who is tired of getting up to answer robocalls.

Tina Beebe, of Southampton, New Jersey, said she would prefer to not answer unfamiliar calls, but she worries she might miss an important call from a loved one with an emergency from another number.

"The 'Do Not Call list' doesn't work," said Beebe, who noted that people shouldn't have to fear answering their phones.

But robocalls are being sent by fraudsters to make it look as if the call is coming from the IRS, FBI, a bank or computer security company. Other recent scams include callers identifying themselves as members of the Burlington or Bucks County Sheriff's Department.

One spoofed call came to Beebe's workplace at the Runway Cafe in Lumberton, and appeared to have come from the electric company. "The caller threatened to shut our electric off if we didn't wire money," Beebe said. "Of course, we didn't."

Taking action

Annmarie DeVito, director of County and Municipal Consumer Agencies of New Jersey, said all transactions need to be scrutinized, from calls to emails to banking and real estate matters.

"We have people (out of state) who are renting homes and apartments from people online, and when they show up, there is a homeowner in the house. The person who they sent the money order to didn't even own the house," DeVito said.

In response to the rise in property and mortgage fraud nationwide, the Burlington County Clerk's Office will be rolling out a service in the next two months to help protect residents from scams and identity theft. The Property Alert Service will allow county property owners to have their name and real estate monitored in real time within the clerk's office. Officials say residents will be notified by email or phone whenever a document, such as a deed, lien or mortgage, has been recorded with the office with their name.

"All too often, victims of these types of fraudulent activities are unaware their homes or identity have been stolen until it's too late," according to a statement from former Burlington County Clerk Tim Tyler, who added that property and mortgage fraud is the fastest-growing white-collar crime in the United States, according to the FBI.

In Pennsylvania, the Bucks County Recorder of Deeds office recently launched a similar alert system. The Bucks County Fraud Alert System, free to all county residents, triggers an email alerting them anytime a document has been recorded in their name.

While officials are working to equip residents with tools to check accounts and property records, thieves continue to get more savvy, consumer advocates say. People in their early 20s are more likely to fall for the scams that offer contest winnings or lucrative job offers, while older victims are more easily trapped by fear tactics that threaten a family member or their financial security, DeVito said.

Unfortunately, both populations are unlikely to report crimes because of embarrassment. "Many of these people are living alone and don't want their family to believe they are not competent to take care of daily issues," she said.

Gift card danger

Email communication also can be deceptive and in many ways mirror official documents.

Buckingham police Detective Cpl. John Bailey encourages people to scrutinize any correspondence that requests information or money and to double-check email addresses, which often are altered slightly by scammers.

For example, just two months ago, two individuals received email messages from someone claiming to be their supervisor, asking them to buy Google Play gift cards and send pictures of the numbers on the back of the cards. Believing they were complying with their boss's direction, they did it. One man lost $8,000 and a woman lost $5,000. A careful look at the email revealed a slight difference in the address, Bailey said.

The Federal Trade Commission's consumer arm reported that gift cards are the No. 1 payment method that imposters demand. Once they've got the code on the back, the money is gone, the FTC reports.

"A slight change in an address or letterhead, a missed capitalization or spelling error, could be a red flag," Bailey said.

He said people need to understand that all their personal information may "public" on the dark web. "A scammer may use what they learn about you to trick you into resetting your password or delivering information that could be used against you," he said.

In nearly all cases, scam tactics prey on people's fears, hopes or sympathies. Bailey recalled one case in which a man in his 40s driving on Swamp Road received a call that his daughter, then a middle school student, had been kidnapped. The scammer demanded that the man deposit money in a certain bank or he would hurt his daughter. While on the phone, the driver flagged down a couple of cyclists, who called police while the man stayed on the phone.

"He was told that if he called the police, his daughter would be killed. So the man was visibly shaken," Bailey said. "We sent a police car to her middle school to verify she was OK, and then I took the call. The scammer then told me, 'You are going to get people killed.' It was smart that this man knew to get the police involved."

Flavin, of Willow Grove, wishes her parents would have alerted the police. She also wishes that after one, two and three major wire transfers, their bank would have intervened and stopped the crime.

Flavin said the trauma her parents suffered from losing their life savings is still hard to live with, but so is the realization that people can be "that cruel."

She shared her father's words on the toll the crime took on her family: "We are bent but we are not broken; we will survive this incident. In a way, it feels like a sad death in the family. If you are not busy, thoughts creep into your head: Why? How could people do this to other people? I gave away $80,544. How could I be so stupid? .... You have to fight it and not let it get you down. We realize we will never see the money. We still have a mortgage, two 10-year-old cars, two cats and our family."

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How to avoid fraud

Here are some practical tips to help you stay a step ahead of scam artists:

Spot imposters. Scammers pretend to be someone you trust, like a government official, a family member, a charity, or a company you do business with. Don't send money or give out personal information in response to an unexpected request — whether it comes as a text, a phone call, or an email.

Do online searches. Search for a phrase that describes your situation, like "IRS call." You can even search for phone numbers to see if other people have reported them as scams.

Don't believe your caller ID. Technology makes it easy for scammers to fake caller ID information, so the name and number you see aren't always real. If someone calls asking for money or personal information, hang up. If you think the caller might be telling the truth, call back to a number you know is genuine.

Don't pay upfront for a promise. Someone might ask you to pay in advance for things like debt relief, credit and loan offers, mortgage assistance, or a job. They might even say you've won a prize, but first you have to pay taxes or fees. If you do, they will probably take the money and disappear.

Consider how you pay. Wiring money through services like Western Union or MoneyGram is risky because it's nearly impossible to get your money back. That's also true for reloadable cards (like MoneyPak or Reloadit) and gift cards (like iTunes or Google Play). Government offices and honest companies won't require you to use these payment methods.

Talk to someone. Before you give up your money or personal information, talk to someone you trust. Con artists want you to make decisions in a hurry. They might even threaten you. Slow down, check out the story, do an online search, consult an expert — or just tell a friend.

Hang up on robocalls. If you answer the phone and hear a recorded sales pitch, hang up and report it to the FTC. These calls are illegal, and often the products are bogus. Don't press 1 to speak to a person or to be taken off the list. That could lead to more calls.

Be skeptical about free trial offers. Some companies use free trials to sign you up for products and bill you every month until you cancel. Before you agree to a free trial, research the company and read the cancellation policy. And always review your monthly statements for charges you don't recognize.

Don't deposit a check and wire money back. By law, banks must make funds from deposited checks available within days, but uncovering a fake check can take weeks. If a check you deposit turns out to be a fake, you're responsible for repaying the bank.